Preannounces Approximately 70% Increase in Revenues for Fiscal Year 2023
BEIJING, Nov. 21, 2023 /PRNewswire/ -- Origin Agritech Ltd. (NASDAQ: SEED) (the "Company" or "Origin"), a leading Chinese agricultural technology company, provided investors with a business update and provided preliminary financial results for fiscal year 2023.
Preannounced Financial Results
- The Company expects fiscal year 2023 revenue to be between $12 to $13 million, representing an increase of 60% to 70% from fiscal year 2022 revenue of $7.4 million.
- The Company expects fiscal year 2023 net income to be between $16 to $17 million, which includes a one-time gain from the sale of a former office building of $19 million.
- The Company expects fiscal year 2023 operating profit of approximately $2 million.
Dr. Gengchen Han, Chairman and CEO of Origin Agritech, commented, "I would like to provide an overview of Origin Agritech's recent accomplishments and our ambitious plans for the future. As we navigate the dynamic landscape of agricultural biotechnology, we remain steadfast in our commitment to revolutionizing the industry and addressing the world's growing food security challenges. The past year has been marked by a series of significant milestones for Origin Agritech. We have made remarkable progress in advancing our innovative technologies, expanding our market reach, and solidifying our position as a leading player in the agricultural biotechnology sector."
"Earlier this year, our triple-stack trait corn, featuring BFL4-2, was selected for inclusion in the national demo plot. This recognition underscores the exceptional quality and potential of our corn varieties. I am confident that our GMO corn hybrids will be approved in 2024. As a reminder, we are one of just four companies with access to this new China GMO market that has just begun to materialize and that we anticipate will grow substantially in the coming years. Our team has diligently conducted pilot seed production, laying the groundwork for full-scale commercialization."
"Our majority-owned joint venture in Shihezi, Xinjiang, secured 200,000 mu of farmland for growing nutrition-enhanced corn (NEC). We are also near completion of our state-of-the-art 100,000-ton corn drying base in Shihezi, Xinjiang. This facility will play a pivotal role in enhancing the efficiency and resilience of our supply chain while expanding our production capacity, enabling us to meet the growing demand, and ensuring the timely delivery of high-quality NEC corn to our customers. Our large-scale pilot production of nutrition-enhanced corn harvested in September and October 2023 has set the stage for revenue recognition of approximately RMB 50 to 100 million in fiscal year 2024, or $7 to $14 million U.S. dollars. We have produced enough NEC seed for next year's planting and expansion plans. Our NEC corn features are groundbreaking: 8.4% oil content, which is double that of normal corn, 0.31% lysine, a 50% increase, and 102 IU/KG of Vitamin E, significantly higher than average."
"Our team has developed a novel gene editing method that significantly reduces the backcross procedure from 4-5 years to just one year. This breakthrough enables us to convert edited traits into elite commercial lines rapidly. We have also developed nitrogen-efficient corn through gene editing and are conducting extensive testing to validate this trait. We have also established a comprehensive gene editing breeding system encompassing seven traits, including drought resistance, nitrogen efficiency, and plant type. This system allows us to convert any commercial line into an edited line within one year."
Highlights of Questions Submitted from Investors:
- Where are GH5112E-117C and G1105E-823 in the approval process? We are cooperating with a local research institute to continue the experiments.
- How is Zhong Huang 6106 and AOYU 728 progressing? AOYU 728 has performed excellently in the last two years and has become a major competitive product. We expect significant sales growth in the next few years. Zhong Huang 6106 has also performed well and has become our main soybean variety in the Jiangsu area.
- Can you discuss your advancements with nitrogen-enhanced corn? Why is it a huge advantage, and how can we benefit? Nitrogen efficiency corn is a breakthrough in this area. We have worked on this trait since 2004 through GMO methods. We finally made significant progress in 2022. The major advantage of nitrogen-efficient corn is that it increases the corn yield with less nitrogen usage. It will reduce the farms' production costs and environmental nitrogen pollution. Our preliminary result shows a more than 50% yield increase for the inbred line under the same nitrogen usage in the field.
- Can you discuss the approval process for planting all across China? What regions are our crops primarily being planted in? How far along are our competitors? There are four major corn planting areas in China. Northeast and Huanghai are the two main corn-growing areas we focus on.
- Can you provide an update on the Muyuan Foods agreement? Muyuan has tested our NEC hybrids in more than 15 locations in 2023. Potential collaborations are currently under discussion.
- What is the status of approval of variety application of BFL4-2 GMO seeds? Have these seeds been selected for use in the national pilot crop growing program next year? We expect approval to happen in 2024; our hybrids with BFL4-2 are in the national demo plots.
- How many acres of NEC corn will be grown in the next year? We will have confirmed figures in the March/April planting season.
- What is the status of approving the safety certificate application of drought-resistant GMO seed? We have finished the field test and applied for safety certificate approval.
- Could you explain how the NEC corn performed regarding nutritional content and overall yield? NEC yielded comparable yields to its normal corn varieties in more than 50 locations and three years of testing. Oil content is over 8% compared to 3.5-3.8% normal corn, 0.31% lysine, a 50% increase, and 102 IU/KG of Vitamin E, significantly higher than average.
- Are you confident in your original assessment of increasing NEC corn land in Xingjiang province from the 30,000 Mu planted this year to 200,000 Mu? Yes, we are very confident that we can achieve this.
- Does the company intend to expand the NEC contract or joint venture, growing to further provinces before the 2024 planting season? Yes, we intend to expand to further provinces before the 2024 planting season.
- Does the company plan to formally change its fiscal year to align with harvest season? We are discussing the possibility with our auditors and legal counsel and will have further updates when something more definitive is ready to announce.
"Looking ahead, I am very optimistic and excited about the future of Origin Agritech. We have made remarkable strides in advancing our groundbreaking agricultural technologies in the past year. Our achievements in gene editing and the development of our nutrition-enhanced corn are testaments to the dedication and expertise of our team. The recognition of our triple-stack trait corn and the successful pilot production of our nutrition-enhanced corn are just the beginning of what promises to be a transformative journey for Origin Agritech. As we look to the future, our focus remains to revolutionize agricultural biotechnology and contribute meaningfully to global food security. The potential approval of our GMO corn hybrids in 2024, our advancements in gene editing, and the expansion of our production capabilities are pivotal steps in this direction."
"I am not satisfied with our stock price and believe that the market is severely discounting our company's upside potential. We are taking steps to ensure that we achieve a fair and realistic market valuation, and we look forward to conveying new developments and delivering value to our shareholders," concluded Dr. Han.
About Origin Agritech Limited
Origin Agritech Limited, founded in 1997 and headquartered in Zhong-Guan-Cun (ZGC) Life Science Park in Beijing, is a leading Chinese agricultural technology company. In crop seed biotechnologies, Origin Agritech's phytase corn was the first transgenic corn to receive the Bio-Safety Certificate from China's Ministry of Agriculture. Over the years, Origin has established a robust biotechnology seed pipeline including products with glyphosate tolerance and pest resistance (Bt) traits. For further information, please visit the Company's website at www.originagritech.com. The Company also maintains a Twitter account for updating investors on company and industry developments, which is https://x.com/origin_agritech.
Forward-Looking Statements
This communication contains "forward-looking statements" as defined in the federal securities laws, including Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements address expected future business and financial performance and financial condition, and contain words like "expect," "anticipate," "intend," "plan," "believe," "seek," "will," "would," "target," and similar expressions and variations. Forward-looking statements address matters that are uncertain. Forward-looking statements are not guarantees of future performance and are based on assumptions and expectations which may not be realized. They are based on management's current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates but involve a number of risks and uncertainties, many of which are beyond the company's control. Some of the important factors that could cause the company's actual results to differ materially from those discussed in forward-looking statements are: failure to develop and market new products and optimally manage product life cycles; ability to respond to market acceptance, rules, regulations and policies affecting our products; failure to appropriately manage process safety and product stewardship issues; changes in laws and regulations or political conditions; global economic and capital markets conditions, such as inflation, interest and currency exchange rates; business or supply disruptions; natural disasters and weather events and patterns; ability to protect and enforce the company's intellectual property rights; and separation of underperforming or non-strategic assets or businesses. The company undertakes no duty or obligation to publicly revise or update any forward-looking statements as a result of future developments, or new information or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and actual results may differ materially from the anticipated results. You are urged to consider these factors carefully in evaluating the forward-looking statements contained herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements.
For more information, please contact:
Origin Agritech Limited Contact:
Kate Lang (Mandarin/English)
Director of Investor Relations
Phone: +86 186-1839-3368
Email: bing.lang@originseed.com.cn
Investor Relations Contact:
Matthew Abenante, IRC
President
Strategic Investor Relations, LLC
Tel: 347-947-2093
Email: matthew@strategic-ir.com
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SOURCE Origin Agritech Limited
